Price Comparison Sites: Advantages/Disadvantages

Online comparison websites have become a very popular way of helping consumers compare the market for energy suppliers, for electricity, gas and oil. They are also useful to compare prices when trying to decide on car or home insurance products, as well as many other products.

What are the advantages of using a price comparison site?

The consumer can save money

The customer may save money as checking quotes with a comparison website allows many different providers to be searched at once enabling the lowest price available to be selected.

They are so convenient

Price comparison sites are easy and convenient to use as once the details are entered, the quotes can be saved rather than manually gathering quotes from multiple providers through phone or individual provider websites.

They broaden your research

Price comparison sites may highlight less well-known companies which are not household names as being the best value for money and big money savings for consumers.

They can remind you about future dates

Price comparison sites can email the consumer the following year reminding them to use the comparison websites again to search for the lowest price, say for car insurance or energy suppliers' prices.

What are the disadvantages of using a price comparison site?

Not all providers use comparison websites

Not all providers use price comparison websites and prefer to be contacted for competitive prices, e.g. Hughes insurance. This means that the consumer may be missing out on other competitive prices.

Not all price comparison sites cover Northern Ireland

The consumer may find that their time has been wasted when researching price comparison sites as their quotes/services do not always cover Northern Ireland. One example may be energy providers and a small number of insurance companies.

The cheap prices can be misleading

Sometimes the price comparison sites show a very cheap, competitive price that appears at the top of the page. However usually this is a price for basic cover, so by the time the customer has added all the additional charges needed to meet their needs, there may not be a saving at all.

Also, some energy suppliers may use off-peak tariffs to attract costumers and push their prices to the top of the list. However when peak costs are considered and included in the overall price, the agreed price on the comparison can increase dramatically.

QUESTIONS YOU COULD BE ASKED:

Write down one advantage of using a comparison website. (1mark)

It allows consumers to quickly compare prices online.

Explain one disadvantage of using a comparison website when searching for home insurance. (2marks)

One disadvantage is that not all insurance providers are listed on comparison websites, so the consumer may miss out on better deals that are only available directly from certain companies.

Analyse the benefits of using price comparison sites. (6marks)

Saves time: Comparison websites allow consumers to view a range of prices and deals from different companies in one place, saving the time and effort of visiting multiple individual sites. (2 marks)

Easy to compare features: Consumers can compare not only prices but also the features and benefits of products or services, helping them make a more informed decision. (2 marks)

Helps find best deals: These sites often highlight special offers or cheapest options, allowing users to save money and choose the best value for their needs. (2 marks)

Discuss the disadvantages of using comparison websites. (6marks)

Not all providers are listed: Some companies choose not to appear on comparison sites, meaning users may miss out on better deals available directly from providers. (2 marks)

Sponsored results may be biased: Some sites promote certain companies higher up the results list because they pay for advertising, which can mislead consumers. (2 marks)

May not show full costs: The cheapest option may not always include all fees or offer the best level of cover, leading to extra costs later on. (2 marks)

Evaluate the role of consumer legislation in protecting consumer rights when buying goods. (10marks)

Consumer legislation plays a vital role in protecting the rights of individuals when buying goods. One major benefit is that it ensures product quality and safety. Laws such as the Consumer Rights Act 2015 state that goods must be of satisfactory quality, fit for purpose and as described. This means consumers can expect a refund, repair or replacement if the product is faulty. Another advantage is that it protects consumers from misleading information. Legislation prevents businesses from using false advertising or making dishonest claims, so customers can make more informed choices.

However, consumer legislation also has limitations. A key drawback is that many people are unaware of their rights, so they may not challenge unfair treatment or request a refund. This reduces the law’s effectiveness. Another issue is that some businesses take advantage of legal loopholes. For example, they may use complicated terms and conditions or delay refund processes to avoid fulfilling their legal obligations. A final weakness is that legal action can be slow and stressful.

In conclusion, consumer legislation is essential for ensuring people are treated fairly and goods meet basic standards. It builds trust in the marketplace and helps protect people from being exploited. However, the effectiveness of the law depends on consumer awareness and the ability to enforce rights. Even though laws are in place, it can take time, effort and money to take a case to court, which puts some consumers off. However, while not perfect, these laws provide a strong foundation for consumer protection.